Average Retirement Savings by Age:
Summary, Analysis, and Strategies
By Ruthanne Monteleone, CFP® & Seth Borders CFP®, CPWA®
The Million Dollar Question:
As Certified Financial Planners® we field a wide variety of questions. Some more common than others. By far the most common question we get asked? “How much do I need to retire?” The only right answer to that question is, it depends! Expenses, tax filing status, risk tolerance, and timeframe are all valid inputs that change that answer for everyone. However, we’re human beings, and often we can’t help but compare our situation to others. Looking at not only the average retirement savings by age group, but also the median retirement savings by age group, can tell you a little bit about how your situation stacks up your peers, but it tells us a much bigger story about this country’s preparedness for retirement.
Savings by Age Group
|
Age Group |
Average Savings |
Median Savings |
|
Under 35 |
$49,130 |
$18,880 |
|
35–44 |
$141,520 |
$45,000 |
|
45–54 |
$313,220 |
$115,000 |
|
55–64 |
$537,560 |
$185,000 |
|
65–74 |
$609,230 |
$200,000 |
|
75+ |
$462,410 |
$130,000 |
Analysis: What the Numbers Reveal
Average savings are heavily skewed by a small number of high-net-worth individuals, while median savings give a clearer picture of what most people actually have saved. The gap between average and median grows wider with age, suggesting that wealth inequality increases over time. That makes a lot of sense when you consider the effects of compound interest over time. I’ve often told clients “Your investments will make more money the last ten years before you retire, than you saved in the first 25 years.”
For example, at age 65–74, the average is over $600K, but the median is just $200K. That means more than half of retirees have less than $200K, which may not be enough to cover even basic living expenses over a 20+ year retirement.
What this tells me is time and saving consistently are the most important components to a successful retirement. Let’s look at an example: If a person saves $6,000 per year and earns a 6% rate of return per year, they will have $708,000 at the end of 35 years. How about if that same person saved for 25 years instead? Shaving off the first ten years of savings causes a massive drop to $348,000. 15 years? $148,000. It may not be rocket science, but saving early and saving often is the key to success. It may be intuitive to some, but the power of compounding interest is taken for granted by most.
A Concerned Reflection
This disparity is deeply concerning. The average paints a picture of progress, but the median tells a story of vulnerability. Many Americans are entering retirement with far less than they’ll need, especially considering rising healthcare costs, inflation, and longer lifespans.
It’s not just a financial issue—it’s a societal one. Without adequate savings, and arguably just as important, a solid financial plan, retirees may face difficult choices: delaying retirement, relying on family, or depending heavily on Social Security, which itself faces long-term sustainability challenges.
Talk to your kids about finances and saving early. Instead of talking to your friends about today’s hot stock, ask how they plan for uncertainty instead. You may be surprised how open people will be about what’s working for them, and you might encourage someone you care about to save a little harder than they would otherwise. One conversation, like many of you have felt after speaking with us at Plan & Prosper, can have a profound impact over time.
Strategies to Boost Retirement Savings
Maximize Employer-Sponsored Plans
Contribute at least enough to get the full employer match—it’s free money. Consider increasing your contribution rate annually or with each raise.
Open or Max Out an IRA
Traditional IRA contributions may be tax-deductible. Roth IRA contributions are made with after-tax dollars, but withdrawals are tax-free in retirement.
Automate Contributions
Set up automatic transfers to retirement accounts to build discipline and ensure consistent growth.
Use Catch-Up Contributions
If you’re 50 or older, you can contribute extra to retirement accounts: $7,500 for 401(k) and $1,000 for IRA.
Consider a Health Savings Account (HSA)
Offers triple tax advantages: contributions are tax-deductible, growth is tax-free, and withdrawals for medical expenses are tax-free.
Invest Wisely
Diversify your portfolio and consider target-date funds or robo-advisors. Rebalance periodically.
Reduce Debt and Expenses
Pay off high-interest debt and cut unnecessary expenses to redirect funds toward retirement.
Use Retirement Calculators
Estimate how much you’ll need based on lifestyle, location, and expected longevity.
Work with a Certified Financial Planner®
Learn the answers to the questions you didn’t know to ask. Lose sight of the hottest investment trends and set your focus on what strategies and techniques are best for your individual situation. If there is someone you care about, ask how prepared they feel for retirement and encourage them to double check, especially when they’re confident.
If you’re concerned about where you stand or want a pat on the back for being above average, we’re here for you. Reach out, tell your friends and family about your experience working with us. We’re always happy to help. Especially the people who you care about the most.